Canadian Securities Course (CSC) Practice Exam · Question
Which strategy involves simultaneously buying a put option and selling a call option on the same underlying asset with the same strike price and expiry date?
A straddle involves buying (or selling) both a call and a put option with the same strike price and expiration date on the same underlying asset, anticipating h
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Question: Which strategy involves simultaneously buying a put option and selling a call option on the same underlying asset with the same strike price and expiry date?
Answer options:
- Strangle ✅ Straddle
- Collar
- Butterfly spread
Correct answer: Straddle
Explanation: A straddle involves buying (or selling) both a call and a put option with the same strike price and expiration date on the same underlying asset, anticipating high (or low) volatility.
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